The Western Union Company (WU) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining us for Citi's 13th Annual Fintech Conference. For this session, we're excited to host Western Union. With Western Union with us today, we have Matt Cagwin, who is CFO. Thank you, Matt, for joining us.

Andrew, thank you for having me. It's been great to be here so far today.

Great conference so far. Thanks for joining.

I think it'll start off maybe -- I think most people are familiar with Western Union, maybe start off with just going through a brief report card of what's transpired since you outlined the strategy, the Evolve 2025 strategy, in October 2022? Maybe just talk about just some of your outline initiatives, how you're trending versus those and then maybe some learnings along the way. And then we'll get deeper, but just kick off for today.

Awesome, Andrew, thank you for the question. And you know all this, but for those who may be new to our story, we laid out in October of 2022 our 3-year plan at our Investor Day here in New York. And in that, we had 4 pillars. The first pillar was to stabilize our retail business, which we are excited about the progress we've made there. It's probably been one of the things that have been slightly ahead of what we thought would be. So over the last 18 to 20 months, we've been able to take a business that had been declining on a revenue and transaction basis to -- we've actually built to stabilize the transactions for the last 2 quarters through a combination of better customer service for both our agents and our customers through additional enhancements to our point-of-sale solution, and I'll talk later about the detail of that. And then as well as we started in the middle of last year, introducing a little more testing on pricing. That's really our first pillar is stabilized in that retail business. Our second one was get back to market level growth in the branded digital business. The digital business, we believe, will grow somewhere between 10% and 20%. We have, over the last year, been able to get back to the point now where we've had 3 quarters of double-digit transaction growth, with a 13% growth in the fourth quarter. We've been able to get back to having double-digit new customer growth over the last year. We've been able to revert back from having declining revenue to we actually grew revenue in the second half of last year and flat for the full year with an ex rate of 4% going into this year. And we believe as the year progresses, the transactions and revenue will converge. It will not be because transactions come down or revenue stays where it is, but we'll continue to see progress in our revenue trajectory throughout this year. So very happy about that one, too. We felt really good about that when we had our Investor Day. We already started launching some of the programs that have allowed that to be possible. As you probably remember, we launched a new go-to-market program in August of 2022. So it was 3 months old by the time of our Investor Day. But that program was a combination of changing our marketing ads and how we engage with our customers and modernizing those, improving our funnel from the point of someone coming to our website to how you ask the information you want because we figured out where the fall-off rates were to have people come further into the process. We've tested promotional pricing to get more people through the door, and then we've gotten closer to market-based pricing to help them stay in the door.

All right.

We've been really excited about the retention rate on this. When you do a promotional program, you always wonder, will you be able to retain the customers that you thought you would be able to get -- or you got? And the actual retention rate we've seen has been actually equal to or better in most of the geographies around the world. So we've been really excited about that. And then the third pillar is expanding our accessible financial services for our customer base. This has been the longest pole in the tent. We've had a long history of having a bill pay business and a money order business. But our goal is to expand the number of touch points we have with our customers so that they stay more -- higher affinity towards Western Union. And over the last year, 1.5 years, we've done a few different things. We continue to expand our wallet solution. We're now in 5 countries around the world, 4 within Europe. And then we've launched last year in Argentina. We've launched a new prepaid business here in the U.S. We've started to modernize our money order business here in the U.S. It's coming in the pilot phase or beta phase. We are close on getting our Brazilian and U.S. wallet out in the marketplace, and we've done some lending solutions. So we feel good about the progress we're making. We're learning a lot. This is the one that had a lot of new activity. So we learn -- test and learn and make enhancements. So we feel great about where we're going on that pillar. And the very last one is optimize our expense base. And we've made some great progress here. Over the last 12 months in 2023, we were able to save $50 million, redeploying most of that back into our business last year and fund all the things that came in Pillar #3. So feel good about that and feel good about the fact that we have as many opportunities for 2024 and expect to have similar level this year.

Fantastic. That's a great overview. And we'll dig into some of those in a moment, sort of digital and then retail. But I think first, just is at a high level, I think the outlook that you provided seems to suggest that you're on track for what you provide in terms of underlying revenues and EPS. I mean, obviously, there to parse out of rack and all that stuff. But is that a fair characterization? Are you on track versus the 2025 trajectory that you outlined previously?

Yes, we feel very good, if not slightly ahead. So if you go back to what we had shared at our Investor Day 18 months ago, we had talked about having a 2% improvement per year coming out of 2022. So last year, our core results in Iraq, we thought would be down somewhere between 2% and 4% revenue, while we solidify the base of our company. We were able to -- if you back out Iraq and the incremental pricing we did, we felt very good about where we were there. This year's guide, if you just kind of walk forward from where we were in '22, would put you at the lower end of the range. We think that the midpoint you're kind of right ahead. And if you get the upper end, you're way ahead of plan, where we had thought. And we feel great about next year as well. EPS kind of concept, we had talked about mid-single-digit EPS growth if you kind of backed yourself all the way up to 2022 and move yourself forward, you'll get to a whatever a couple of pennies ahead.

Got it. And now let's dig into digital a little bit. And maybe you can level set and talk about how the demographics in used cases are different for digital versus retailer. And then I think within digital, there's also different subsets of customers. So maybe drill down just to the demographic and sort of subsegment level, that would be great.

Yes, certainly. So holistically, we at the highest level, our customer base is for a retail, customer is very similar someone who's cross borders, someone who's aspiring for more, someone typically at the lower economic status of whatever country they're visiting. So from that aspect, the core is similar. Where they differ is usually when you make the crossing of borders, you don't have access to banks or other financial services, so they typically will find us on the retail side. And we're able to board about 20 million new customers per year from people crossing borders. Then what ends up happening is once they've been a customer for a little while, they will then start to get a little more cemented in the market, they'll may get a bank count, might get a debit card, a prepaid card, things of those nature. And they'll evolve -- evolving to more of a digital solution. And that's -- so the same customer, but now they've been in the market for a little longer. They'll move their way into the digital space because now they can fund their transaction either through an account, debit card, credit card, which you can do that on the retail side, but most of that's always cash initiated. And then the other part is a little bit unique and different in the digital side, we're making some good headway on this, is you can do any one of those 3 methods of funding. You can do an account, you can do debit card, you can do credit card. And then the backside of that is, historically, we've been very heavy cash payout. So someone sending money back home to Mexico or to wherever else in the world and it's very heavy cash payout. We've been really emphasizing over the last 6 months more an account-to-account. That's where we really allow the growth in this business is, is when people can really fund to an account, and we're seeing great growth in that space. So we did other segmentation within digital is what is your pay in method and what's your payout method? And it's a little bit different demographic, but not massively different.

Got it. That's helpful. And then maybe we could just take a step back. I think the business grew for many years very, very well, and then 2021 hit. And back half, obviously, we had some pandemic benefit, then the back half started decelerrate. Then we saw a step down in growth and obviously, improving at this point. But maybe just remind to talk about kind of what happened to sort of caused that divergence in terms of growth rate before we get to kind of the forward look, maybe another level set question.

Yes. So hard me. I wasn't here at the time. So what I can say is we're hyper focused on turning around that business. We feel great about the progress we've made. It's really all around having a great customer service, customer experience with a fair market price. And when you do that, you attract lots of different customers. You're able to retain those customers, we're able to work with you for many years. So I can't really tell you what's different, but they did obviously have a very fast growing through a number of years, right, but then slowed down in the back half of the pandemic, where people migrated from retail to digital. And there is a little bit coming back to retail.

Got it. Okay, maybe just jump to unit economics to talk about what you're seeing from an LTV CAC perspective for the new cohorts that you've onboarded using the new go-to-market strategy versus maybe what you saw historically? And I guess, maybe just before I get into that, I remember, we met several months ago, we talked about sort of your ability to kind of identify and measure customers and performance a little bit better. Maybe talk about where you're at in terms of being able to actually like measure things like on a customer-specific level, like unit economics core or specific level? And then we can sort of talk about that question about, how unit economics are trending?

Absolutely. So what you're alluding to. So we do look at the LTV to CAC on a country level, on a corridor, on a demographic level, depending on the country, some have different than the others. And we make our -- as you maybe you probably have seen, we made incremental investments in the fourth quarter marketing. As we did that, we put that into the markets that had the best LTV to CAC ratios. I'm not going to highlight those for my competitors, but there are obviously some that have higher levels and others. So we do look at it that way. We also looked at it by what is the way that you actually attract your customer? And is it better to do one vehicle of communication, marketing versus another? And if things that work we're actually doubling down on those and we're stopping ones that have a lower payback.

Got it. That's good to hear. So the incremental marketing, yes, I don't think I've heard that before. It makes a lot of sense, obviously, put behind kind of the best unit of economics sort of corridors where it's going to drive the best return over the next couple of years, which makes a ton of sense, obviously. Okay. I guess the -- we think about just the competitive environment, has it been -- it's interesting because post-pandemic, there's been a little bit of a shakeout in terms of subscale players, like digital not being able to acquire as many customers or invest. And it seems like that's benefited other players who are more scaled. So what are you seeing in the competitive environment more broadly?

Yes. So we're definitely seeing a consolidation, I mean, through M&A, but rather more consolidation of who can afford to invest. What you saw throughout the pandemic and the year after pandemic, if it's even over. You saw a lot of smaller players, niche players that would do huge promotional pricing, get to transactions free or super discounted transactions. And that was under a period of time where profitability matter. You can borrow money at a cheap level. As you've seen all that kind of pandemic coming -- ending or if it's more the demand of profitability and how easy is it access to capital. But you've seen those uneconomical decisions starting to pivot away from what have been happening and those players have -- you don't even see in the market as much anymore.

Right. Right. Got it. Okay. And when we think about just marketing expense, so you talked about the take up marketing expense in the fourth quarter. What's baked in for 2024? Are you -- do you continue to go after like the higher kind of unit economic orders more aggressively? Is there optionality to flex up marketing spend? Maybe talk about the philosophy in terms of marketing expense and returns when it comes to 2024 and beyond.

Yes, absolutely. So [indiscernible] a couple of subs back. So one thing we also talked about our last earnings call is that we were actually able to reduce our CAC by about 15%. So that has allowed us to spend a little bit less in 2023 than we spent in 2022. So we spent about $190 million. We're actually able to grow our new customers double digit and the transaction is 13%. So we're going to continue to make investments in marketing where we think we can get a good return. We do think there's lots of places that we can do that. The spend in 2023, while it was larger in Q4, the full year, again, was slightly down, not meaningfully [indiscernible] million dollars. That was really more moving it around to more of the holiday season and where you actually get the customers that are trying to send money around that versus the year before, we were a little more front-end loaded. So I wouldn't say that Q4 was an anomaly for the full year, it's more of getting it right throughout the year. As far as you think through the 2024 levels, it's going to be slightly more, but it's going to be largely consistent with last year's levels.

Got it. And you talked about the rate of transaction growth and conversion between transaction and revenues. I guess, first, when you -- talked about the digital market growing 10% to 20%. I think you're growing transactions, low teens around [indiscernible]. I guess, what's the comfort level in being able to kind of maintain that level of low teens growth? And then we think about go-to market, do you feel like you're at where you need to be from a promotional pricing perspective? Or is more needed to kind of keep that transaction rate going?

Yes. So we feel very about where we are. We've been able to accelerate our transaction growth in Q4 from where we were in Q2 and Q3. We continue to be able to grow new customers double digit. And then you get to bifurcate my conversation earlier about your pay and payout method for digital matters. So what we're seeing is an accelerated growth on the account-to-account customers. We're actually seeing for our -- we disclosed this, I think, in Q3, but we're seeing growth closer to 30% in that business, which is where a lot of the folks are going is on to account to account, where the other portion of our business is growing more lower double digits, and that brings you to the 13% range. So we think there's enough runway on this. We think the market is growing. We think our pricing is where it needs to be. As you know, we introduced promotional pricing, but then we also had market-based pricing, which comes in as a cohort basis. So if you're a new customer, you'll get the promotion for your first transaction, then you'll move into ongoing market-based pricing. As you do that, there's still going to be a little bit of pressure on our overall RPT for digital because you're going to have older customers attrit that are at a higher RPT than your new ones at market-based. But other than that, we don't think there's massive, further change we have to do other than monitoring the market reacting. But we've not seen meaningful changes from our competitors.

And then retention, I think you recently highlighted you called out the approval of retention last quarter. What's the opportunity to continue to improve that? Is it's not pricing, is it service levels? Is it product enhancements? Maybe you could walk through how we can continue to see the retention go up.

Yes. So for us, it's all tied together. So you got to give them the door, you've got to treat them fairly on price. But we learned our #1 reason we lose customers is not price. You lose customers because you are generally not giving the right customer service. So we spent a lot of time over the last 2 years improving our call centers, how we talk to people, having empathy and compassion when they call, and understanding that they're not sending money because they're buying a vacation. They're sending money because their family needs support and that money not making might actually have an impact on how they're able to support their families and get things done. So having that compassion get their problems solved. That's number one. Number two is how do you have other touch points with them? If someone sending transactions a handful of time or a couple of handfuls of time, how do you have other interactions, whether that be through our prepaid card, whether it's through lending, not on our balance sheet, by the way, partners. Whether it be through having a wallet solution? How do you have more touch points? So the affinity stays they become more sticky, you're able to push it up. As you know, our retention for digital last year improved by 120 basis points. We think there's still more runway on that.

Got it. Okay. Super helpful. And then just back to the pricing conversation, maybe this -- we'll talk about this at retail a little bit more. But historically, Western Union had a sort of a premium in terms of price. Is that still the case? Or has it normalized a little bit when you think of it? And obviously, significant because everything is more specific. But how do we think about pricing strategy in terms of your -- what's position versus the overall market?

Yes. So I have to split this up into 2 groups. One is you've got your retail business and you have your digital, talk about digital first. Digital, it's easy to go in market shop. And we believe that the brand that we have, the longevity we have and the trust that our customers have in us, allow us to have a premium price. Now a premium price can't be 50%. You get a premium, but you can't be 50% double the market. But we do believe that we have the right to play a little higher market. Then you move over to the retail side, there's even more variability. As you know, there are multiple kinds of agent locations. You can have an agent that's nonexclusive with many competitors in the same location. There, someone is walking down the -- it may all be in the same machine like a Walmart, or a Kroger, or it could be 5 machines in the agent's location, and they're asking, "What's the best rate? What's the FFX?" Their trust matters. They may, again, we want to pay a little bit more to have someone they trust, but they're not going to pay, again, 50% or double the rate. So that's going to be really competitive -- to be fairly priced, right? Then you can move into an exclusive location where there's a lot of competition on the same street or same block. That's one notch removed from the party -- what we call a party in a store, but you've still got to be somewhat close to competitive because people will walk around the street and ask. And then you got someone who's in an only location in the city, it's in a rural area and you have a lot more pricing power. So in all situations, we think we can have a premium price is just a level of degree kind of premium price.

That makes sense. And when you think about the gap between transaction growth and revenue growth, so obviously, you've articulated that should start to close as you lap some of the go-to-market changes this year. Is it -- is there a mix component or something else that keeps that -- pertains a gap between those 2 metrics? Or how should we think about the ongoing delta bidding transaction revenue growth from a mix pricing other perspective?

Yes. So 2 thoughts on this question. One is, to your point, they will narrow as we lap the promotional pricing -- the new market-based pricing. But that will happen in lumpiness. As you probably know and the audience may know, we launched the program in August '22. We had a fully in the U.S. in the September time frame, took it through Europe in the Q4 '22, Q1 '23 and then other parts of the world in Q2 and Q3 of the year -- later that year. Those will all be chunky as they come through them. The other part for that program is the cohort pricing where new customers get different rates. That will cause a drag on older clients -- legacy clients trading off and new clients are coming on at lower prices, that will cause the spread. And the other thing that will cause a potential spread is mix in the transaction happening in that rural location, I talked about before, in some place where they have a higher rate because take pricing power? Or they happening in the independent on exclusive location where we have a party in a store, that will cause a difference. And then the last one is a mix on, are you driving account to account, which come in a lower yield than a cash to cash? Now from a profitability standpoint, the profit margins are much better on an account-to-account where your profit dollars are a little less. So all of those play into the mix.

Right. Right. That makes sense. And before I switch to retail, I want to talk about the ecosystem play because I think it's really important. But maybe this is a related question before we get to ecosystem. I think one of the items that Evolve 2025 was reducing the number of app instances globally, so you can iterate faster, rollout changes quicker. Where are we in that process? And maybe we can also talk about kind of for that the wallet in terms of where we're at in terms of expansion there.

And those 2 things are good questions asked together. Because we've talked about publicly, the one thing we've learned through our European launch is that having 2 apps in the market is confusing to a customer. We knew that was likely to be the case, but we want to move at pace. So we put in the wallet app on the market, some customers moved over. And if they want to move back, get a vote, it made clunky -- so what we've done about your initial question is on the going to regional patches, we had talked about having 6 regional patches so you can make quicker improvements on APAC or Middle East. And then for that, we've actually rolled out 12 locations so far, heavy concentration in the Middle East last year we took about mostly at Middle East on to the Middle East patch. We've not moved as fast on Europe and Latin America because there, you're going to start having the one app solution rollout. You don't want to have a regional patch in there and then you have this get rid of it because of putting the one app solution and for the wallet. So those 2 things are happening hand in hand as you're moving forward. But our goal is still the same concept of you're going to have a one app solution for a region or you're going to have a wallet or you're going to have a remittance solution for the region and have both those things there as you can move faster, right? And we're going to continue this year and progress.

Maybe we talk about just the ecosystem of our products. Obviously, one part is a wallet and money management table stakes things. Maybe not for your core customer, but in general, but then you can build things around it, like you mentioned lending, liquidity, products. Maybe talk about some early observations about how customers are using the product? And then I think one thing that's interesting is if you have a wallet theoretically, you -- I guess you need to have both sides of the transaction, but there is potential to do kind of honest transactions. So maybe you can talk about the variety of products that you can support in the road map, and then the ability to kind of do on us and transfer within the ledger versus outside.

Certainly. Andrew, just to remade. we have 5 countries live right now. So we have 4 countries in Europe, Romania, Germany, Italy, Poland, and then we've taken Argentina live. And I'm giving you those 4 because there's different learnings from each of them.

Sure.

I'm going to work my way backwards. On the Argentina when we plugged it into our bill pay solution. So now people can take -- if I'm sending money to my family back in Argentina, they can take another wallet and then they can pay their bill pays -- their bills to our bill pay solution plugged into the wallet for that market. we're seeing an uptake of people diverting funds from cash pickup, then going into one of our locations and paying a bill, if you're able to, for a matter a little less for the one that are company stored, but for noncash you're able to save on commission expense. So that's a learning that we had a hypothesis for and is now starting to pan out in that market where you've plugged in another solution where they can actually use the funds rather than taking cash. In Europe, you talked about could people do P2P? We're seeing transactions actually 2x to 4x higher in Europe for the 4 countries that have the wallet than we're seeing in other markets of similar size and similar demographics, and that's usually largely driven by 2 things. One is it's happening because you're using your debit card to buy something and you have money in your wallet or two, is there is a high uptake in P2P between people in the same country, even though there's only 4 countries going live. So those are 2 illustrations of where we're seeing some progress.

Got it. Super helpful. Maybe let's switch gears to retail. And I know there's a lot of things going on that you're doing, whether it's -- you mentioned customer service enhancements, point-of-sale enhancements, there's many other things. But maybe talk about some of your initiatives. How those are being absorbed in the market? And then bring us up to speed in terms of the assumptions for what you're targeting for retail revenue improvement in '24 and '25? So I think it's -- I think there's broadly a question about stabilization, but what does that mean for you?

Yes. So first on the product enhancements. So we're still in the tons the more we can do on the product side to make our agents and customers' lives easier. The goal is really how do you keep moving friction? How do you speed up the line? How do you help your customers understand? How the transaction is working? And as you highlighted and everybody knows, we've put in the market 4 or 5 things last year, whether it be one-step refund, which has taken out millions of calls from our call center. We've put into market the -- remember me, which saves the level of data you have to get when you come into a transaction, which helps both the customer and the agent side. Quick Resend, which remembers the last couple of transactions you've done. We're working on a solution called Track and Transfer, which allows the receiver and sender to be able to look and see what the transaction is in the process flow. If you're sending money to me, which you can do any time you want, please do. You can then watch when I pick it up and say, "Hey, I saw you got your money what are you buying with it." Just help enhance the relationship between the 2. To the second part of your question, what are we expecting about revenue for '24 and '25? We highlighted earlier, we're expecting the transactions and revenue to continue to converge. Our expectation is the end of our '25 journey that will get back to flattish revenue and flattish transaction growth. They're faster on transactions, but room to grow on revenue.

What do you think is the biggest opportunities and risks associated with achieving that? Because the reason I ask is this is obviously a big question you get that I get young investors in terms of our incremental price investments needed because we saw some small amount. We saw some needed to kind of stimulate transaction growth. So that's not -- on the risk side that might -- some additional pricing might be needed. But on the opportunity side, you have all these opportunities that are coming in that can improve retention, can improve customer service quality, which can support repeat transactions and things like that. So how does the -- those 2 balanced?

So you actually answered the question for me, which is awesome. So thank you. If I point you to the second half, I'd answer, if you go back and look at our transactions that we've shown in our earnings call the last 2 quarters. we've shown 6 to 8 quarters of where is our transaction gone. And you can see the first half of that horizon in the late '22, first half of '23, we've been able to make meaningful progress in reduce and decline in our transactions. That -- none of that was pricing related. That was us working with our agents. I haven't even highlighted here today, but we've also been working on -- stop giving upfront signing bonuses and moving them to more performance-based so that we can grow together versus they buy a yacht or sailing in the Caribbean or Mediteranean or whatever that can and be gone. So we've now -- almost every new have been part of as I got here, we've now pivoted away from signing bonuses to some kind of performance bonus. I'm not trying to make them make less. I'm just trying to for us to both feel hungry to make it better and bigger. And that's making a difference, working with them on how they advertise. We've not only improved our marketing for the digital side, we've also improved on the retail side. So all those are starting to make progress. Then we put it on the technology enhancements I talked about before, a lot of those started to hit in the market in the first half of that year. And then we started doing the pricing when we had the upside from my Iraq and the May to August time frame, and that's continued to make progress. I can't actually split for you the difference between what have Q3 and Q4 been had I not done the pricing? But we're happy that we've seen good progress in the corridors and the cities or DMAs, we call them, where we've done the pricing. We're happy with those. But it's not -- it's extra fuel on the fire. It's not a fire. Correct. Right. You need a little bit of both, but the first one is the biggest driver.

Right. Biggest driver is, I think, what you're saying is fundamental in terms of [indiscernible] making secondarily, like price adjustments to sort of make the premium a little more appropriate. Understood. That makes a lot of sense. And then we talked about the digital market growing end of '20. What do you think the retail market grows? I always think about remittance market, obviously, total growing, some combination of economic growth and migration trends, somewhere between the low to mid-single digits, but where do you see kind of the steady-state growth of retail?

Yes. So people are still migrating over. So the overall remittance market is growing somewhere in the low single digits. When you look at the split between digital, which is stealing from banks. So it's hard to look at just the core digital growth and say, "Oh, that means you're dying over here, and that's 3% down. You got to take out the banks first, put part of that in here." We get back to a flattish number. So call it negative 1 to positive 1 type, any given year on the retail side. We've been a share donor for years. We think that the progress we're making allows us to not be a shared owner. We actually have grown share in Mexico for the first time in the last 4 months in years. And you can see some of our competitors what they've been doing. So our goal is get our fair share of both digital and get our fair share of retail, and we think that gets flattish, you pointed out here. I guess it's back to flattish on the original side and gets us to double digit on the digital side.

Got it. Makes a lot of sense. And then only a few minutes left, but I want to make sure I touch on sort of the margin expense base profile. So you think the way you described the expense base is your fixed variable and agent commissions, you sort of address the agent commissions in your earlier comments. But maybe you could talk about where we're at in terms of the operating expense efficiencies across those categories? Obviously, I think you outlined $150 million it evolve. Much of that, I think, is going to be reinvested in the business. But talk us through we're at now and if there's additional areas that we can consider for cost efficiency, certainly?

So I've now been at Western Union for a little over 18 months, I guess. And when we laid that out at Investor Day 15 months ago, we had ideas where we're trying to go. We were trying to change a culture. We were trying to get people to be more focused on. Am I spending money in the right places? Before actually knowing every single place, you're actually going to go find the opportunities. Now had another year plus since that date, and there's infinite opportunities. The places we already spent time on is getting our real estate right? That was low-hanging fruit. We've actually done a huge amount of rightsizing there. We've seen the improvements in our CAC on the marketing side last year. We think there's still some progress to go there, but not actually the same degree. We've made a whole lot of headway on having the right people in the right roles. We rightsized a lot of the support functions. We've added back into the sales organization, the technology organization. We're in the process now of getting activities in the right locations because you've got things where they're inefficient, where you've got too many vendors involved. And if you actually go to one and get a better rate, but you also can get rid of all the handoffs. So there's a ton of further opportunity and a lot of that in my mind is going to come in the technology space. We have a little bit in the compliance, but we are 100% committed to doing the right thing, continuing the support functions. So I think you should expect, in 2024, a similar level of savings that we had last year, which is about $50 million. And then we're well on our way to our $150 million goal on that one.

That's helpful. I was always had a question in my mind about Western Union and the revenue growth required to drive margin expansion. I think based on the changes you're making, it seems like the scale, you expanded margins off a lower rate of growth versus historically. But -- where are we in that process? What's the level of growth required to drive sort of margin scale over the long term?

So as you know, 60% of our costs are variable, right? So they're going to move. And then you get the 40% part, it's fixed or semi-fixed. I think kind of tells you that if you have no growth, you're going to have -- or shrinking is going to be hard and take out costs, which we've been doing. Once you start getting any incremental low single-digit growth, that could provide margin expansion. But the reason why we gave the range of 19 to 21 is for now, we have the leading industry -- leading margin in the industry. We -- sure you'd always love better margins, but our goal is to make sure we have enough latitude to invest back in the business. We've seen opportunity move back and forth between that range, and then we'll readdress that at our next Investor Day about what the long-term guidance is. But growth will add fuel as you saw last year in the first half of the year.

It's a fair way to put it, like what you said by reinvesting in the business versus just harvesting because that's important. Maybe we could talk about just this year from a margin perspective, we get a lot of questions because there obviously is a range, which suggests some flexibility. But what are the variables that can drive margins higher or lower? Obviously, one of those is growth, we talked about marketing expense. But maybe talk us through this year as it relates to kind of the expense profile and margins?

So to me, there's really 2 things that can drive where we end up this year. One is, to your point, how fast is revenue growth? We gave a range for Iraq. We gave a range for the overall business. We gave a range for our consumer services revenue, which we haven't really talked much about today. If any one of those were to go at a faster pace, then the next question is, do we have a place where we can invest back? Or does it go back return to our shareholders? So that can drive a large margin expansion. The other one would be our pace for our cost redeployment program. Last year, we were able to save costs at a faster pace than we were able to reinvest. If that continues into this year, that would also expand margins.

Got it. Super helpful. And then maybe just any closing remarks you want to leave us with as the session winds down?

Andrew, all I can say is sitting here now 18 months in, I am excited about where we are. I think we've got the right strategy. We've got leadership in place right now that is driving it every day and excited about looking ahead to '24.

Awesome. Great note to end. Thanks, Matt, for joining us for the session. And thank you all for being here. I really appreciate it.